Market's Shake on Dubai Shock

By IBT Staff Reporter On 12/07/09 AT 10:32 AM

Last week's currency trading review

The Dollar ended slightly weaker in a very volatile week as the Fed Minutes pushed the USD to its lowest point this year and then the Dubai debt crisis saw it return quickly to favor on safe haven flows. US data was solid with weekly Jobless claims falling below 500k to 466k and Existing Home Sales climbing 10%. Q3 GDP was revised lower to 2.8% vs. 3.5% previously. The Euro broke above resistance at 1.5050 on the Fed's view that they will be keeping rates low for sometime yet. Also helping lift the single currency to fresh year highs near 1.5140 was the German November IFO at 93.9 vs. 91.9 previously. Later in the week risk aversion on the back of the Dubai Debt news the EUR/USD and EUR/JPY was heavily sold. The EUR/USD gained 0.84% closing at 1.4986, after opening the week at 1.4860.

The Japanese Yen gained once again across the board as momentum built on the downside with USD/JPY breaking key levels and then risk aversion sent the crosses lower on Thursday and Friday. USD/JPY broke 86 and 85 before strong warnings from the government saw the price action quickly reversed. NZD/JPY and AUD/JPY both slumped over 5% at one stage. The USD/JPY fell -2.75% closing at 86.47 after opening the week at 88.85. The GBP tracked the Euro to above 1.6700 before falling sharply with the Dubai news and and GBP/JPY selling which at one stage was below the key 140 level. EUR/GBP gained to test 0.9100 on thoughts UK banks were heavily exposed to the Middle east. GBP/USD fell -0.08% closing at 1.6488 after opening at 1.6501. The AUD rallied early in the week on the back of year highs in US stocks before coming under extreme pressure and falling over 3 cents to break the key 0.9000 briefly at the height of panic on Friday. The AUD/USD fell 0.92% closing at 0.9061 after opening at 0.9144.

The forex trading week preview

In the States; On Tuesday, November ISM Manufacturing is forecast at 54.8 vs. 55.7 previously. On Wednesday, Fed's Beige Book released. On Thursday, Weekly Jobless Claims forecast at 483k vs. 466k previously. On Friday, November NonFarm Payrolls forecast at -118k vs. -190k previously. Unemployment Rate forecast unchanged at 10.2%. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, German October Retail Sales forecast at -1.7% vs. -3.9% y/y. Also released, October EU Unemployment forecast at 9.8% vs. 9.7%. On Wednesday, EU Q3 GDP is forecast to remain at 0.4%. On Thursday, ECB rate announcement and speech from President Trichet.In the UK; On Tuesday, November PMI Manufacturing forecast at 54 vs. 53.7 previously. On Thursday, PMI Services forecast at 57 vs. 56.9 previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Thursday, Q3 Capital Spending forecast at -16% vs. -21.70% previously. In Australia; On Tuesday, RBA meet and are forecast to raise rates by 0.25% to 3.75%. On Thursday, October Retail Sales forecast at 0.3% vs. -0.2% previously. We will provide our previews and reviews of these data releases in the daily summary.

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.4702

1.4802

1.5000

1.5020

1.5144

USD/JPY

84.18

84.83

86.60

87.48

88.01

GBP/USD

1.6155

1.6241

1.6495

1.6534

1.6746

AUD/USD

0.8859

0.8907

0.9120

0.9138

0.9323

XAU/USD

1127.00

1138

1173.00

1195.00

1200.00

OIL/USD

74.50

75.00

76.20

78.00

80.00

Euro - 1.5000

Initial support at 1.4802 (Nov 20 low) followed by 1.4702 (Nov 4 low). Initial resistance is now located at 1.5020 (Nov 27 high) followed by 1.5144 (Nov 25 high)

Yen - 86.60

Initial support is located at 85.00 (key level) followed by 84.80 (Nov 27 low). Initial resistance is now at 87.48 (Nov 26 low) followed by 88.01 (Oct 7 former low).

Pound - 1.6495

Initial support at 1.6241 (Oct 19 low) followed by 1.6155 (0.618 of 1.5708-1.6878). Initial resistance is now at 1.6534 (Nov 27 high) followed by 1.6746 (Nov 25 high).

Australian Dollar - 0.9120

Initial support at 0.8907 (Nov 2 low) followed by the 0.8859 (Oct 1). Initial resistance is now at 0.9138 (Nov 27 high) followed by 0.9323 (Nov 25 high).

Gold - 1173

Initial support at 1138 (Nov 27 low) followed by 1127 (Nov 17 high). Initial resistance is now at 1195 (Nov 26) followed by 1200 (Key level).

Oil - 76.20

Initial support at 75.00 (Intraday support) followed by 74.50 (Intraday support). Initial resistance is now at 78 (intraday resistance) followed by 80 (Key level).